Quarterly report pursuant to Section 13 or 15(d)

Related Party Notes Payable

Related Party Notes Payable
3 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]  
Related Party Notes Payable



The following table summarizes the Company’s related party notes payable:


              Balance at:  
    Interest rate     Date of maturity   March 31, 2019     December 31, 2018  
Leo Womack (i)         On demand   $ 3,000     $ 3,000  
Lee Lytton (i)         On demand     3,500       3,500  
Quinten Beasley     10 %   October 14, 2016     10,000       10,000  
Joel Oppenheim (i)         On demand     205,333       215,333  
Bow (i)         On demand     33,144       33,144  
Blue Sky Resources Ltd. (i)         On demand     82,421       131,699  
Jovian Petroleum Corporation (ii)     3.5 %   February 9, 2019     137,846       35,210  
Ivar Siem (iii)     12 %   October 17, 2018     20,000       20,000  
Joel Oppenheim (iii)     12 %   October 17, 2018     10,000       10,000  
Blue Sky Resources Ltd. (iv)     9 %   May 31, 2019     44,998       148,862  
                $ 550,242     $ 610,748  


  (i) Balances are non-interest bearing and due on demand.
  (ii) On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $200,000 (subsequently increased to $500,000 on April 12, 2018) with Jovian Petroleum Corporation (“Jovian”). The CEO of Jovian is Quinten Beasley, our former director (resigned October 31, 2018), and 25% of Jovian is owned by Zel C. Khan, our CEO and director. The initial agreement was for a period of 6 months and it can be extended for up to 5 additional terms of 6 months each. All amounts advanced pursuant to the LOC will bear interest from the date of advance until paid in full at 3.5% simple interest per annum. Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. On December 31, 2018 the due date of this LOC was extended until December 31, 2019.


  (iii) On August 17, 2018, the Company sold an aggregate of $90,000 in convertible promissory notes (the “Director Convertible Notes”), to the Company’s directors, Ivar Siem ($20,000) through an entity that he is affiliated with; Leo Womack ($60,000); and Joel Oppenheim ($10,000). The Director Convertible Notes accrue interest at the rate of 12% per annum until paid in full and were due and payable on October 17, 2018. The amount owed may be prepaid at any time without penalty. The outstanding principal and interest owed under the Director Convertible Notes are convertible into common stock of the Company, from time to time, at the option of the holders of the notes, at a conversion price of $0.10 per share. As additional consideration for entering into the notes, the Company agreed to grant warrants to purchase one share of the Company’s common stock at an exercise price of $0.10 per share for each dollar loaned pursuant to the Director Convertible Notes (the “Bridge Note Warrants”). The warrants had a contractual life of one year. As such, the Company granted (a) 20,000 Bridge Note Warrants to an entity affiliated with Ivar Siem; (b) 60,000 Bridge Note Warrants to Leo Womack; and (c) 10,000 Bridge Note Warrants to Joel Oppenheim. The Director Convertible Notes contain standard and customary events of default. The Company fair valued the warrants issued using the Black-Scholes Option Pricing Model for a total fair value of $6,249. On October 22, 2018, $60,000 in Director Convertible Notes were settled by offsetting against $60,000 proceeds required for the exercise of warrants.
  (iv) On June 8, 2018, the Company entered into a promissory note (the “Acquisition Note”) with Blue Sky in the amount of CAD$406,181. The Note bears interest at 9% per annum and is due in full at maturity on November 30, 2018. The Company may, at its sole discretion, extend the maturity date for a period of six months with notice to the lender and payment of 25% of the principal amount. At December 31, 2018, the maturity date had been extended to May 31, 2019. On April 1, 2019, the Company utilized its LOC with Jovian to pay off in its entirety the June 8, 2018 Acquisition Note with Blue Sky.


The following is a schedule of future minimum repayments of related party notes payable as of March 31, 2019:


2019   $ 560,242  
    $ 560,242